Exhibit 4.3


 


AMERICAN POWER CONVERSION CORPORATION


 


2004 LONG-TERM INCENTIVE PLAN


 


1.                                      Definitions.


 


As used herein, the
following words or terms have the meanings set forth below.


 


1.1                                 “Award” means Options, Restricted Stock,
Performance Restricted Stock, Restricted Stock Units, Performance Restricted
Stock Units, and any other equity-based interests as the Committee shall
determine, or any combination thereof.


 


1.2                                 “Board of Directors” means the Board of
Directors of the Company.


 


1.3                                 “Code” means the U.S. Internal Revenue
Code of 1986, as from time to time amended and in effect, or any successor
statute as from time to time in effect.


 


1.4                                 “Committee” means the committee appointed
by the Board of Directors to administer the Plan,  or the Board of Directors as a whole if no appointment is made,
provided that, if any member of the Committee does not qualify as both an
outside director for purposes of Section 162(m) of the Code and a
non-employee director for purposes of Rule 16b-3 of the Securities
Exchange Act of 1934, as amended, the remaining members of the Committee (but
not less than two members) shall be constituted as a subcommittee of the
Committee to act as the Committee for purposes of granting or approving the
payment of any Awards.


 


1.5                                 “Common Stock” means the common stock,
par value $.01 per share, of the Company.


 


1.6                                 “Company” means American Power Conversion
Corporation, a corporation established under the laws of The Commonwealth of
Massachusetts.


 


1.7                                 “Fair Market Value” of a share of Common
Stock for purposes of determining the exercise price per share of an Option
shall be determined as of the date of grant or, if the prices or quotes
discussed in this paragraph are unavailable for such date, the last
business day for which such prices or quotes are available prior to the
date of grant.  If the Common Stock is
publicly traded, “Fair Market Value” shall mean (i) the average (on that
date) of the high and low prices of the Common Stock on the principal national
securities exchange on which the Common Stock is traded, if the Common Stock is
then traded on a national securities exchange; or (ii) the last reported
sale price (on that date) of the Common Stock on the Nasdaq National Market, if
the Common Stock is not then traded on a national securities exchange; or
(iii) the closing bid price (or average of bid prices) last quoted (on
that date) by an established quotation service for over-the-counter securities,
if the Common Stock is not reported on the Nasdaq National Market.  If the Common Stock is not publicly traded,
“Fair Market Value” shall be deemed to be the fair value of the Common Stock as
determined by the Committee after taking into consideration all factors which
it deems appropriate, including, without limitation, recent sale and offer
prices of the Common Stock in private transactions negotiated at arm’s length.


 


1.8                                 “Incentive Stock Option” means an Option
intended to be an “incentive stock option” within the meaning of
Section 422 of the Code.


 


1.9                                 “Option” means a stock option entitling
the holder to acquire shares of Common Stock, once vested, upon payment of the
exercise price.


 


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1.10                           “Participant” means a person who is
granted an Award under the Plan.


 


1.11                           “Performance Award” means an Award
granted by the Committee pursuant to Section 6.10.


 


1.12                           “Performance Criteria” means any, or any
combination, of the following areas of performance (determined either on a
consolidated basis or, as the context permits, on a divisional, subsidiary,
line of business, geographical, project, product or individual basis or in
combinations thereof): sales; revenues; assets; expenses; income; margins;
earnings before or after any deductions and whether or not on a continuing
operations or an aggregate or per share basis; return on equity, investment,
capital or assets; inventory; organizational realignments or other
organizational changes; infrastructure changes; one or more operating ratios;
borrowing levels, leverage ratios or credit rating; market share; capital
expenditures; cash flow; stock price; stockholder return; sales of products or
services; customer satisfaction or loyalty; customer acquisition or retentions;
acquisitions or divestitures (in whole or in part); joint ventures and
strategic alliances; spin-offs, split ups and the like; reorganizations;
strategic investments or recapitalizations, restructurings, financings
(issuance of debt or equity) or refinancings; business process or core
competency metrics; and the performance of the Company in any of the items
mentioned above in comparison to performance of any indexes or peer
groups.  Performance Criteria and any
Performance Goals with respect thereto need not be based upon any increase, a
positive or improved result or avoidance of loss.


 


1.13                           “Performance Goal” means an objectively
determinable performance goal established by the Committee with respect to a
given Performance Award that relates to one or more Performance Criteria.


 


1.14                           “Performance Period” means a time period
which shall, in all cases, exceed three (3) months in length, during which
the Performance Goals established in connection with Performance Awards must be
met. Performance Periods may be subdivided into performance cycles of no less
than three months.


 


1.15                           “Performance Restricted Stock” means
Common Stock that is subject to a risk of forfeiture or other restrictions that
will lapse upon the satisfaction of one or more specified Performance Goals.


 


1.16                           “Performance Restricted Stock Unit” means
a right to receive Common Stock in the future, with the right to future
delivery of the Common Stock subject to a risk of forfeiture or other
restrictions that will lapse upon the satisfaction of one or more specified
Performance Goals.


 


1.17                           “Plan” means the American Power Conversion
Corporation 2004 Long-Term Incentive Plan, as from time to time amended and in
effect.


 


1.18                           “Restricted Stock” means Common Stock
that is subject to a risk of forfeiture or other restrictions that will lapse
upon the satisfaction of one or more specified conditions.


 


1.19                           “Restricted Stock Unit” means a right to
receive Common Stock in the future, with the right to future delivery of the
Common Stock subject to a risk of forfeiture or other restrictions that will
lapse upon the satisfaction of one or more specified conditions.


 


1.20                           “Service Relationship” means (a) for
an employee of the Company or its Subsidiaries, such person’s employment
relationship with the Company or its Subsidiaries, and (b) for a
consultant, contractor, director or advisor of the Company or its Subsidiaries,
such person’s consulting, contractor, director or advisory relationship with
the Company or its Subsidiaries.


 


1.21                           “Stock Award” means an Award of
Restricted Stock, Performance Restricted Stock, Restricted Stock Units, Performance
Restricted Stock Units or other equity-based interest that is not an Option, or
any combination thereof.


 


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1.22                           “Subsidiary” or “Subsidiaries” means a
corporation or corporations in which the Company owns, directly or indirectly,
stock possessing fifty percent (50%) or more of the total combined voting power
of all classes of stock.


 


1.23                           “Ten Percent Stockholder” means any
person who, at the time an Award is granted, owns or is deemed to own stock (as
determined in accordance with Sections 422 and 424 of the Code) possessing more
than ten percent (10%) of the total combined voting power of all classes of
stock of the Company or its parent or a Subsidiary.


 


2.                                      Purpose.


 


The Plan has been
established to advance the interests of the Company by providing for the grant
to Participants of incentive Awards.


 


3.                                      Administration.


 


3.1                                 The Plan shall be administered by the
Committee and, to the extent provided herein, the Board of Directors. A
majority of the members of the Committee shall constitute a quorum, and all
determinations of the Committee made by a majority of its members at a meeting
at which a quorum is present shall constitute the valid acts of the Committee.
Any determination of the Committee under the Plan may be made without notice or
meeting of the Committee by a writing signed by all of the Committee members.


 


3.2                                 Subject to the provisions set forth
herein, the Committee shall have full authority to determine the terms and
conditions of Awards to be granted under the Plan. Subject to the provisions
set forth herein, the Committee shall have full authority to interpret the
terms of the Plan and of Awards granted under the Plan, to adopt, amend and
rescind rules and guidelines for the administration of the Plan and for its own
acts and proceedings, and to decide all questions and settle all controversies
and disputes which may arise in connection with the Plan.


 


3.3                                 The interpretation and construction by
the Committee of any provisions of the Plan or any Award granted under the Plan
shall be final and binding on all concerned persons unless otherwise determined
by the Board of Directors.


 


4.                                      Shares Subject to the Plan; Limitations.


 


4.1                                 Number of Shares.  The number of shares of Common Stock that
may be delivered in satisfaction of Awards granted under the Plan (such shares
are hereinafter referred to as the “Authorized Shares”) shall be equal to
(a)  the number of shares of Common
Stock that remain available for grant under the Company’s 1997 Stock Option
Plan (the “1997
Plan”) as of the
Effective Date (as hereinafter defined), plus (b) any shares of Common Stock
underlying outstanding awards under the 1997 Plan that after the Effective Date
(as hereinafter defined) expire or terminate without being exercised or that
would otherwise again become available for issuance under the 1997 Plan ,
provided that in no event shall the number of Authorized Shares exceed
15,000,000.  The number of shares of
Common Stock delivered upon exercise of an Award shall be determined without
consideration of any Common Stock actually or constructively transferred by the
Award holder to the Company (including through the holding back of shares that
would otherwise have been deliverable upon exercise) in payment of the exercise
price or tax withholding.


 


4.2                                 Reacquired Shares.  If Common Stock subject to any Award under
the Plan is not issued or ceases to be issuable for any reason, including
because the Award is forfeited, terminated, expires


 


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unexercised, is settled in cash in lieu of Common
Stock or is exchanged for other Awards, the shares of Common Stock that were
subject to that Award shall again be included in Authorized Shares.


 


4.3                                 Type of Shares.  Common Stock delivered by the Company
under the Plan may be authorized but unissued Common Stock or previously issued
Common Stock acquired by the Company. No fractional shares of Common Stock will
be delivered under the Plan.


 


4.4                                 Limit on Shares for Awards.  No more than 1,000,000 Authorized Shares
may be allocated to Awards that are granted to any individual Participant
during any 12 month period.  This limit
shall not be adjusted by the cancellation, forfeiture, termination, expiration,
or lapse of any Award prior to its payment.


 


4.5                                 Limit on Shares for Restricted Stock and Restricted Stock
Units.  Subject
to Section 4.2, no more than fifty percent (50%) of the Authorized Shares
may be issued to Participants pursuant to Awards of Restricted Stock or
Restricted Stock Units.


 


5.                                      Eligibility and Participation.


 


The Committee may select
Participants from among those (1) employees of the Company and its
Subsidiaries, (2) non-employee Directors and (3) any consultants,
contractors or advisors to the Company or its Subsidiaries, who, in the opinion
of the Committee, are in a position to make a significant contribution to the
success of the Company and its Subsidiaries. No officer, employee, non-employee
Director, consultant, contractor, advisor, or Participant shall be entitled to
receive any Award under the Plan unless and until such person has been
designated by the Committee to be a Participant and such Participant has
actually received such Award. The designation of a Participant to receive any
Award under the Plan shall not require the Committee to designate that person
to receive any other Award under the Plan. In selecting persons to be
Participants and in determining the type and amount of their respective Awards,
the Committee shall consider any and all factors that it deems relevant or
appropriate. Eligibility for Incentive Stock Options is limited to employees of
the Company or of a “parent corporation” or “subsidiary corporation” of the
Company as those terms are defined in Section 424 of the Code.


 


6.                                      Awards.


 


6.1                                 General.  The Committee will determine the terms and
conditions of all Awards, subject to the limitations provided herein. Although
the Plan also provides for the grant of Performance Awards under
Section 6.10, notwithstanding anything herein to the contrary, the
Committee may, in its sole discretion, grant Awards under the Plan containing
performance-related goals that do not constitute Performance Awards, do not
comply with Section 6.10 and may not be granted or administered to comply
with the requirements of Section 162(m) of the Code.


 


6.2                                 Participants.  From time to time while the Plan is in
effect, the Committee may, in its absolute discretion, select from among the
persons eligible to receive Awards (including persons to whom Awards were
previously granted) those Participants to whom Awards are to be granted.


 


6.3                                 Award Agreements.  Each Award granted under the Plan shall be
evidenced by a written Award agreement in such form as the Committee shall from
time to time approve. Award agreements shall comply with the terms and
conditions of the Plan and may contain such other provisions not inconsistent
with the terms and conditions of the Plan as the Committee shall deem
advisable. In the case of an Incentive Stock Option, the Award agreement shall
contain, or refer to, such provisions relating to exercise and other matters as
are required of “incentive stock options” under the Code. Award agreements may
be evidenced by an electronic transmission (including an e-mail or reference to
a


 


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website or other URL) sent to the Participant through
the Company’s normal process for communicating electronically with its
employees. As a condition to receiving an Award, the Committee may require the
proposed Participant to affirmatively accept the Award and agree to the terms
and conditions set forth in the Award agreement by physically and/or
electronically executing the Award agreement or by otherwise physically and/or
electronically acknowledging such acceptance and agreement. With or without
such affirmative acceptance, however, the Committee may prescribe conditions
(including the exercise or attempted exercise of any benefit conferred by the
Award) under which the proposed Participant may be deemed to have accepted the
Award and agreed to the terms and conditions set forth in the Award agreement.


 


6.4                                 Non-Transferability of Awards.  No Award may be transferred
by the Participant otherwise than by will, by the laws of descent and
distribution and during the Participant’s lifetime the Award may be exercised
only by him or her.


 


6.5                                 Exercise; Vesting; Lapse of Restrictions.  The Committee may determine
the time or times at which (a) an Award will become exercisable,
(b) an Award will vest or (c) the restrictions to which an Award is
subject will lapse.


 


6.5.1                        Determination of the Exercise Price.  The Committee will determine
the exercise price, if any, of each Award requiring exercise. Notwithstanding
the foregoing, the exercise price per share of Common Stock for an Incentive
Stock Option shall be not less than 100% (110% in the case of an Incentive
Stock Option granted to a Ten Percent Stockholder) of the Fair Market Value per
share on the date the Incentive Stock Option is granted.


 


6.5.2                        Additional Conditions.  The Committee or the Board of Directors
may at the time of grant condition the exercise of an Award upon agreement by
the Participant to subject the Common Stock to any restrictions on transfer or
repurchase rights in effect on the date of exercise. Any such conditions shall
be set forth in the Award agreement or other document evidencing the Award.


 


6.5.3                        Manner of Exercise.  Any exercise of an Award shall be made in
such manner as may be from time to time prescribed by the Committee, including,
without limitation, pursuant to electronic, telephonic or other instructions to
a third party administrating the Plan. In the event an Award is exercised by
the executor or administrator of a deceased Participant, or by the person or
persons to whom the Award has been transferred by the Participant’s will or the
applicable laws of descent and distribution, the Company shall be under no
obligation to deliver stock thereunder until the Company is satisfied that the
person or persons exercising the Award is or are the duly appointed executor or
administrator of the deceased Participant or the person or persons to whom the
Award has been transferred by the Participant’s will or by the applicable laws
of descent and distribution.


 


6.5.4                        Payment of Exercise Price.  Where the exercise of an Award is to be
accompanied by payment, the Committee may determine the required or permitted
forms of payment, subject to the following: 
all payments will be by cash or check acceptable to the Committee, or, if
permitted by the Committee (i) through the delivery of shares of Common
Stock that have a fair market value equal to the exercise price,
(ii) through a broker-assisted exercise program acceptable to the
Committee, or (iii) by any combination of the foregoing permissible forms
of payment, provided that where shares of Common Stock issued under an Award
are part of an original issue of shares, the Award will require that at least
so much of the exercise price as equals the par value of such shares be paid in
a type of consideration that is lawful for the payment of par value under
applicable law.


 


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6.5.5                        Period of Awards.  An Award shall be exercisable during such
period of time as the Committee may specify, but in the case of an Incentive
Stock Option not after the expiration of ten years (five years in the case of
an Incentive Stock Option granted to a Ten Percent Stockholder) from the date
the Option is granted.


 


6.6                                 Termination of Awards.  Unless the Award by its terms or the
Committee by resolution shall expressly provide otherwise:


 


6.6.1                        Vesting.  If a Participant’s Service Relationship terminates for
any reason, all Awards shall cease vesting on the date of termination of the
Participant’s Service Relationship (“Date of Termination”), provided that
Awards vesting on the Date of Termination shall be considered to have vested.


 


6.6.2                        Options.  If a Participant’s Service Relationship terminates due
to the Participant’s death or Disability, 
all Options that are vested as of the Date of Termination may be
exercised by the Participant, or in the case of death by the Participant’s
executor or administrator or the person or persons to whom the Options are
transferred by will or the applicable laws of descent and distribution, until
the earlier of (a) the specified expiration date of the Option, or (b) one
hundred eighty (180) days after the Date of Termination.  “Disability” means the disability of the
Participant within the meaning of Section 22(e)(3) of the Code.  If a Participant’s Service Relationship
terminates for any reason other than death or Disability, all Options that are
vested as of the Date of Termination may be exercised by the Participant until
the earlier of (a) the specified expiration date of the Option, or (b) ninety
(90) days after the Termination Date. 
The Committee shall also determine all matters relating to whether a
Service Relationship is continuous, including, for example and without
limitation, in the event the Service Relationship changes from an employment
relationship to a consulting or advisory relationship.


 


6.6.3                        Notwithstanding anything in this
Section 6.6 to the contrary, (i) no Award granted under the Plan may
be exercised beyond the date on which such Award would otherwise expire
pursuant to the terms thereof, and (ii) no Incentive Stock Option granted
under the Plan may be exercised after the expiration of ten years (five years
in the case of an Incentive Stock Option granted to a Ten Percent Stockholder)
from the date the Incentive Stock Option was granted.


 


6.7                                 Tax Withholding.


 


6.7.1                        The Committee shall have the right to
require the individual exercising the Award to remit to the Company an amount
sufficient to satisfy any federal, state, or local withholding tax requirements
(or to make other arrangements satisfactory to the Company with regard to such
taxes) prior to the delivery of any Common Stock pursuant to the exercise of
the Award. In the case of an Incentive Stock Option, the Committee may require
as a condition of exercise that the individual exercising the Incentive Stock
Option agree (i) to inform the Company promptly of any disposition (within
the meaning of Section 422(a)(1) of the Code and the regulations
thereunder) of Common Stock received upon exercise, and (ii) to give such
security as the Committee deems adequate to meet the potential liability of the
Company for the withholding of tax, and to augment such security from time to
time in any amount reasonably deemed necessary by the Committee to preserve the
adequacy of such security.


 


6.7.2                        In the case of an Award that is exercised
by an individual that is subject to taxation in a foreign jurisdiction, the
Committee shall have the right to require the individual exercising the Award
to remit to the Company an amount sufficient to satisfy any tax or withholding
requirement of that foreign jurisdiction (or to make other arrangements
satisfactory to the


 


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Company with regard to
such taxes prior to the delivery of any Common Stock pursuant to the exercise
of the Award).


 


6.8                                 Options.  Each eligible Participant who is also a
United States taxpayer may be granted Incentive Stock Options only to the
extent that, in the aggregate under this Plan and all incentive stock option
plans of the Company, such Incentive Stock Options do not violate the annual
vesting limitation contained in Section 422(d) of the Code (currently
$100,000, determined at the time the Incentive Stock Options is granted). Any
Options granted to an employee in excess of such amount will not be treated as
Incentive Stock Options.


 


6.9                                 Stock Awards.


 


6.9.1                        Rights as a Stockholder.  Subject to any restrictions applicable to
an Award,  (a) a Participant holding
Restricted Stock or Performance Restricted Stock, whether vested or unvested,
shall be entitled to enjoy all stockholder rights with respect to such
Restricted Stock or Performance Restricted Stock, including the right to
receive dividends and to vote the shares and (b) with regard to Awards other
than Restricted Stock and Performance Restricted Stock, a Participant may not
vote the shares represented by an Award, but an Award may provide a Participant
with the right to receive dividend payments or dividend equivalent payments
with respect to Common Stock subject to the Award (both before and after such
Common Stock is earned or vested), which payments may be either made currently
or credited to an account for the Participant, and may be settled in cash or
Common Stock, as determined by the Committee. Any such settlements, and any
such crediting of dividends or dividend equivalents or reinvestment in shares
of Common Stock, may be subject to such conditions, restrictions and
contingencies as the Committee shall establish, including the reinvestment of
such credited amounts in Common Stock equivalents.


 


6.9.2                        Stock Certificates; Legends.  Certificates representing shares of
Restricted Stock shall bear an appropriate legend referring to the restrictions
to which they are subject, and any attempt to dispose of any such shares in
contravention of such restrictions shall be null and void and without effect.
The certificates representing shares of Restricted Stock may be held by the
Company until the restrictions to which they are subject are satisfied.


 


6.10                           Performance Awards.


 


6.10.1                  Recipients of Performance Awards.  The Committee may grant
Performance Awards to any Participant. Each Performance Award shall contain the
Performance Goals for the Award, including the Performance Criteria, the target
and maximum amounts payable, and such other terms and conditions of the
Performance Award as the Committee in its discretion establishes. In the case
of Performance Awards to any Participant whom the Committee determines is or
may become a “covered employee” within the meaning of Section 162(m) of the
Code during the Performance Period or before payment of the Performance Award,
each such Performance Award may, in the Committee’s discretion, be granted and
administered to comply with the requirements of Section 162(m) of the
Code. Each such Performance Award to a covered employee shall be confirmed by,
and be subject to, a Performance Award agreement.


 


6.10.2                  Establishment of Performance Goals.  The Committee shall establish
the Performance Goals for Performance Awards. The Committee shall determine the
extent to which any Performance Criteria shall be used and weighted in
determining Performance Awards. The Committee may not modify any Performance
Goal during a Performance Period for any “covered employee” within the meaning
of Section 162(m) of the Code in a way that could make it more


 


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likely that such
Performance Goal would be achieved. The Performance Goals for any Performance
Award for any such “covered employee” shall be established not later than
90 days after the start of the Performance Period to which the Performance
Award relates and, for Performance Periods shorter than one year, prior to the
completion of twenty-five percent (25%) of such period.


 


6.10.3                  No Discretion to Increase Performance Awards.  The Committee shall establish
for each Performance Award the amount of Common Stock payable at specified
levels of performance, based on the Performance Goal for each Performance
Criteria. The Committee shall make all determinations regarding the achievement
of any Performance Goals. The Committee may not increase the Common Stock that
would otherwise be payable upon achievement of the Performance Goal or Goals.


 


6.10.4                  Certification of Achievement of Performance Goals.  The actual payments of Common
Stock to a Participant under a Performance Award will be calculated by applying
the achievement of Performance Criteria to the Performance Goal. In the case of
any Performance Award to a “covered employee” within the meaning of
Section 162(m) of the Code, the Committee shall make all calculation of
actual payments of Common Stock and shall certify prior to the payment of the
Performance Award the extent, if any, to which the Performance Goals have been
met; provided, however, that the Committee shall not be required to certify the
extent to which the Performance Goals have been met if the payments under the
Performance Award are attributable solely to the increase in the price of the
Common Stock.


 


6.10.5                  Timing of Payment of Performance Awards.  Payment of earned Performance
Awards shall be made in accordance with terms and conditions prescribed or
authorized by the Committee. The Committee may permit the Participants to elect
to defer the receipt of Performance Awards upon such terms as the Committee
deems appropriate.


 


6.11                           Repricing.  Notwithstanding any other provision of the Plan
(except for Section 7.1 relating to stock dividends, stock splits and
changes in corporate structure or capitalization), the Committee shall not
reprice any Option granted under the Plan without stockholder approval.


 


6.12                           Authority of the Committee.  Subject to the provisions of
Section 9, the Committee shall have the authority, either generally or in
any particular instance, to waive compliance by a Participant with any obligation
to be performed by him under an Award and to waive any condition or provision
of an Award.


 


6.13                           Listing of Common Stock, Withholding and Other Legal
Requirements.  The
Company shall not be obligated to deliver any Common Stock until all federal,
state and international laws and regulations which the Company may deem
applicable have been complied with, nor, in the event the outstanding Common
Stock is at the time listed upon any stock exchange, until the stock to be
delivered has been listed or authorized to be added to the list upon official
notice of issuance to such exchange. In addition, if the shares of Common Stock
subject to any Award have not been registered in accordance with the Securities
Act of 1933, as amended, the Company may require the person or persons who
wishes or wish to exercise such Award to make such representation or agreement
with respect to the sale of Common Stock acquired on exercise of the Award as
will be sufficient, in the opinion of the Company’s counsel, to avoid violation
of said Act, and may also require that the certificates evidencing said Common
Stock bear an appropriate restrictive legend.


 


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7.                                      Effect of Certain Transactions.


 


7.1                                 Changes to Common Stock.  In the event of a stock dividend, stock
split or other change in corporate structure or capitalization affecting the
Common Stock that becomes effective after the Effective Date (as hereinafter
defined), the Committee shall make appropriate adjustments in (i) the number
and kind of shares of stock for which Awards may thereafter be granted
hereunder, (ii) the number and kind of shares of stock remaining subject
to each Award outstanding at the time of such change and (iii) the
exercise price of each Award, if applicable. References in the Plan to shares
of Common Stock will be construed to include any stock or securities resulting
from an adjustment pursuant to this Section 7.1.


 


7.2                                 Acquisition, Merger or Consolidation.


 


7.2.1                        Consequences of an Acquisition.  Upon the consummation of an Acquisition, the
Committee or the Board of Directors, or the board of directors of the surviving
or acquiring entity (as used in this Section 7.2, the “Board”),
shall, as to outstanding Awards (on the same basis or on different bases as the
Board shall specify), make appropriate provision for the continuation of
such Awards by the Company or the assumption of such Awards, whether vested or
unvested, by the surviving or acquiring entity by substituting on an equitable
basis for the shares of Common Stock then subject to such Awards either
(a) the consideration payable with respect to the outstanding shares of
Common Stock, whether vested or unvested, in connection with the Acquisition,
(b) shares of stock of the surviving or acquiring corporation or
(c) such other securities or other consideration as the Board deems
appropriate, the fair market value of which (as determined by the Board in its
sole discretion) shall not materially differ from the fair market value of the
shares of Common Stock subject to such Awards immediately preceding the
Acquisition. In addition to or in lieu of
the foregoing, with respect to outstanding Options, the Board may, on
the same basis or on different bases as the Board shall specify, upon written notice to the affected optionees,
provide that one or more Options then outstanding must be exercised, in whole
or in part, within a specified number of days of the date of such notice, at
the end of which period such Options shall terminate, or provide that one or more
Options then outstanding, in whole or in part, shall be terminated in exchange
for a cash payment equal to the excess of the fair market value (as determined
by the Board in its sole discretion) for the shares of Common Stock subject to
such Options over the exercise price thereof; provided, however, that
before terminating any portion of an Option that is not vested or exercisable
(other than in exchange for a cash payment), the Board must first accelerate in
full the exercisability of the portion that is to be terminated.  Unless otherwise determined by the Board (on
the same basis or on different bases as the Board shall specify), any
repurchase rights or other rights of the Company that relate to an Award shall
continue to apply to consideration, including cash, that has been substituted,
assumed or amended for an Award pursuant to this paragraph. The Company may hold in escrow all or any
portion of any such consideration in order to effectuate any continuing
restrictions or risks of forfeiture.


 


7.2.2                        Acquisition Defined.  An “Acquisition” shall mean: (x) the sale of
the Company by merger in which the stockholders of the Company in their
capacity as such no longer own a majority of the outstanding equity securities
of the Company (or its successor); or (y) any sale of all or substantially all
of the assets or capital stock of the Company (other than in a spin-off or
similar transaction); or  (z) any other
acquisition of the business of the Company, as determined by the Board.


 


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7.2.3                        Assumption of Options Upon Certain
Events.  In connection with a
merger or consolidation of an entity with the Company or the acquisition by the
Company of property or stock of an entity, the Board may grant Awards under the
Plan in substitution for stock and stock-based awards issued by such entity or
an affiliate thereof.  The substitute
Awards shall be granted on such terms and conditions as the Board considers
appropriate in the circumstances.


 


8.                                      Rights to a Service Relationship.


 


Neither the adoption of
the Plan nor any grant of Awards confers upon any employee, non-employee
Director, consultant, contractor or advisor of the Company or a Subsidiary any
right to the continuation of a Service Relationship with the Company or a
Subsidiary, as the case may be, nor does it interfere in any way with the right
of the Company or a Subsidiary to terminate the Service Relationship of any of
those persons at any time.


 


9.                                      Discontinuance, Cancellation, Amendment and Termination.


 


The Committee or the
Board of Directors may at any time discontinue granting Awards under the
Plan.  The Board of Directors or the
Committee may at any time and in any way amend, suspend or terminate the Plan
or any Award granted under the Plan; provided, however, that no such amendment,
suspension or termination may materially impair any Award then outstanding
without the consent of the holder of such Award; and provided further, however,
that without the requisite vote of the Company’s stockholders, no amendment to
the Plan may increase the number of shares available for issuance under the
Plan. The amendment of an Award under this Section 9 may include, without
limitation, the declaration by the Committee or the Board of Directors that any
Options shall become immediately exercisable or vest in full or in part or that
any Stock Awards shall be free of some or all restrictions, risks of forfeiture
or conditions.


 


10.                               Effective Date.


 


The Plan will become
effective automatically as of the date on which it is approved by the
stockholders of the Company (the “Effective Date”) and unless the Plan is
sooner terminated by the Committee or the Board of Directors, no Awards shall
be granted under the Plan after the tenth anniversary of the Effective Date.


 


11.                               Liability of the Company.


 


By accepting any benefits
under the Plan, each Participant and each person claiming under or through such
Participant shall be conclusively deemed to have indicated acceptance and
ratification of, and consented to, any action taken or made under the Plan by
the Company, including, without limitation, the Board of Directors and the
Committee. No Participant or any person claiming under or through a Participant
shall have any right or interest, whether vested or otherwise, in the Plan or any
Award hereunder, contingent or otherwise, unless and until such Participant
shall have complied with all of the terms, conditions and provisions of the
Plan and any Award agreement related thereto. Neither the Company nor any of
its Subsidiaries, nor any of their respective directors, officers, employees or
agents, shall be liable to any Participant or any other person if it is
determined for any reason by the Internal Revenue Service or any court having
jurisdiction that any Incentive Stock Option granted hereunder does not qualify
for tax treatment as an “incentive stock option” under Section 422 of the
Code.


 


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12.                               Unfunded Plan.


 


Insofar as it provides
for Awards, the Plan shall be unfunded. Although bookkeeping accounts may be
established with respect to Participants who are granted Awards, any such
accounts will be used merely as an administrative convenience. Except for the
holding of Restricted Stock in escrow, the Company shall not be required to segregate
any assets that may at any time be represented by Awards, nor shall the Plan be
construed as providing for such segregation, nor shall the Company, it
officers, the Board of Directors or the Committee be deemed to be a trustee of
Common Stock or cash to be awarded under the Plan. Any liability of the Company
to any Participant with respect to an Award shall be based solely upon any
contractual obligations that may be created by the Plan; no such obligation of
the Company shall be deemed to be secured by any pledge or other encumbrance on
any property of the Company.


 


13.                               Dispute Resolution and Governing Law.


 


Participants and the
Company agree to resolve issues that may arise out of or relate to the Plan or
the same subject matter by binding arbitration in Providence, Rhode Island in
accordance with the rules of the American Arbitration Association. The Plan and
Awards granted hereunder, including Award agreements, shall be governed by and
construed in accordance with the laws of The Commonwealth of Massachusetts,
excluding its conflicts or choice of law rules or principles that might
otherwise refer construction or interpretation of this Plan to the substantive
law of another jurisdiction.


 


14.                               Foreign Jurisdictions.


 


To the extent that the
Committee determines that the material terms set by the Committee or imposed by
the Plan preclude the achievement of the material purposes of the Plan in
jurisdictions outside the United States, the Committee will have the authority
and discretion to modify those terms and provide for such additional terms and
conditions as the Committee determines to be necessary, appropriate or
desirable to accommodate differences in local law, policy or custom or to
facilitate administration of the Plan. The Committee may adopt or approve
sub-plans, appendices or supplements to, or amendments, restatements or
alternative versions of, the Plan as it may consider necessary, appropriate or
desirable, without thereby affecting the terms of the Plan as in effect for any
other purpose. The special terms and any appendices, supplements, amendments,
restatements or alternative versions, however, shall not include any provisions
that are inconsistent with the terms of the Plan as then in effect, unless the
Plan could have been amended to eliminate such inconsistency without further
approval by the stockholders. The Committee shall also have the authority and
discretion to delegate the foregoing powers to appropriate officers of the
Company.


 


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